Many parts of the UK economy are experiencing a bounce right now. There’s no doubt that the near-term Brexit certainty – that the UK would avoid a no deal withdrawal on 31 January – provided by the Conservatives’ general election victory has given plenty of businesses a spring in their step. The vanquishing of a left-wing Jeremy Corbyn Labour Party has gone some way to boosting confidence, too.
It stands to reason that the jobs market has picked up in the wake of last month’s ballot, then. And what an improvement there has been. According to a joint report by KPMG and REC, “UK recruiters [have] signalled a further increase in permanent staff appointments in January amid reports of improved business confidence following the general election.”
January saw the first back-to-back rise in permanent staff appointments for more than a year, it says. What’s more, the total number of worker vacancies across the country rose at the quickest pace for 10 months last month. A slight dip in temporary staff billings muddied the waters but this can’t mask the fact that things are, broadly speaking, looking up.
The market’s moving
That report would have made for particularly good reading for SThree (LSE: STEM). Why? Well, this recruiter’s ticker illustrates its focus on the niche areas of science, technology, engineering and mathematics. And that KPMG and REC analysis shows that, while demand for permanent staff grew across nine out of 10 job categories in January, the rate of increase in vacancy numbers was particularly impressive in engineering. Growth here lagged only behind that seen in the accounting/financial segment.
Don’t think that January’s uptick is a mere flash in the pan, though. There’s been a raft of data in recent months illustrating the rising strength of the domestic jobs market in recent months. Things are clearly looking good for SThree’s UK operations, then.
A brilliant buy
A word of caution, though. A disorderly Brexit has been averted in recent weeks, sure. But the spectre of the UK falling off the cliff edge remains in play for the end of 2020. Unless politicians hit the ground running with trade talks and show signs of steady progress it’s possible that the jobs market on these shores could start to stutter again.
That’s not to say that I think that a bad Brexit outcome would spell disaster for SThree. Its leading position in specialist employment sectors provides it with better protection that many of its peers in the recruitment industry. The fact that it sources less than 15% of net fees from British clients provides it with extra peace of mind, too.
Right now SThree trades on a forward price-to-earnings ratio of 11.6 times and carries a bulging 4.1% dividend yield, too. At these prices I’d happily load up on its shares today. In fact, given its rising might in improving global markets I’d buy it right now and hold on until the end of the decade.
